Electrical Distributors See Slow But Steady Growth in 2004

Electrical distributors shouldn’t breathe a sigh of relief just yet, but it looks like the electrical market is ready to begin a slow, steady climb back to economic respectability.

According to Electrical Wholesaling’s recent survey for its Novembers issue’s Market Planning Guide, electrical distributors are looking for a 5.2 percent sales increase in 2004, putting total sales through this channel at $77.8 billion.

Electrical wholesalers are an optimistic bunch — perhaps overly optimistic at times. Last year, respondents to EW’s Market Planning Guide (MPG) survey forecast a 5.8 percent increase in sales for 2003. This year, respondents tempered that 2003 forecast to an increase of 2.6 percent.

That may still be a bit high, judging from an EW survey of electrical distributors. When asked earlier this year to compare electrical product sales for the first six months of 2002 to the first six months of 2003, 57.5 percent of respondents said their companies’ sales had decreased (31.3 percent) or stayed the same (26.2 percent). Overall, with mid-year sales up an average of only 0.6 percent compared with mid-year 2002 sales, electrical distributors sales would have to accelerate considerably the latter half of this year to make their revised 2003 forecast of a 2.6 percent increase.

Note, too, that respondents to the annual MPG survey have been overly bullish since the bubble burst in 2000. The original sales forecast for 2001 was an increase of 7.1 percent; final numbers showed a decrease of 2.1 percent. For 2002, electrical wholesalers originally forecast an increase of 4.5 percent; final numbers logged a decrease of 0.5 percent.

Still, many sales managers believe it’s best to be overly ambitious when it comes to strategic planning because, by being overzealous, salespeople will work harder to reach goals.

You also may want to factor two other market forecasts for the electrical wholesaling industry into your market forecasts. DISC Corp., Orange, Conn., expects electrical industry sales to increase 1.5 percent in 2004. (See article, page 1.)

The National Association of Wholesale-Distributors (NAW), Washington, D.C., expects electrical distributors’ sales to increase 6.2 percent in 2004, according to its 2004 economic forecast for various wholesale-distribution trades.